After City Advantage Rent Subsidy Cutoffs, Legal Aid's Chief Attorney Warns Of Increased Homelessness And Increased Costs For Taxpayers
FRIDAY, JUNE 29, 2012

Following a divided 4-3 New York Court of Appeals ruling this week, there are no further court proceedings to prevent the New York City Department of Homeless Services from ending Advantage rent subsidies for the last 8,000 formerly homeless families and individuals in the subsidy program.  In March 2011, the Department announced that it would end the Advantage program and stop providing rent subsidies to thousands of formerly homeless families and individuals.  In response, The Legal Aid Society and the law firm of Weil, Gotshal & Manges LLP filed Zheng v. City of New York on behalf of what was then a class of 16,000 formerly homeless households.  Court orders continued the Advantage payments from April 2011 through January 2012.  After the Advantage landlords of class members received their last subsidy payments in January 2012, all of the remaining 8,000 class member households have been at imminent risk of eviction and repeat homelessness.

Steven Banks, The Legal Aid Society's Attorney-in-Chief, told The New York Law Journal this week that as a result of the City's determination to cut off the rent payments the municipal shelter system will be "swamped" with homeless individuals and families who have been receiving rent subsidies under the Advantage program.  "[B]y winning the City is actually losing because now 8,000 formerly homeless families and individuals will lose their homes prematurely and flood the shelter system at a greater cost to the taxpayers than the cost of continuing to pay the subsidies until the Advantage agreements expire in March 2013," he said.  Banks added that the taxpayers are being left to hold the bag for the City's position that [a] 'guarantee' [to pay the rent] doesn't mean what the dictionary says it means."  It costs $3,000 per month to provide shelter for a family in comparison to approximately $1,000 per month for an Advantage rent subsidy. 

Banks also told The Wall Street Journal that "[i]t’s astounding the City would have gone all the way to the Court of Appeals to defend their right to leave families without the ability to pay their rent."  He confirmed that the court’s ruling marks the end of the legal fight.  There is no further court to appeal to, he said, "except the court of public opinion."

The Wall Street Journal and Reuters also reported on Mr. Banks' warning of increased homelessness as a result of the Advantage cutoffs. 

Earlier this month, The Wall Street Journal and the Daily News reported on increasing numbers of families who are in the City's shelter system because of the end of the Advantage rent subsidies.  At that time, Mr. Banks told The Wall Street Journal that the end of the subsidy is "a ticking  time-bomb" that will cost taxpayers more than the subsidies.  He also told the Daily News that in the past "the last year or so of transition between administrations has led to substantial issues in the shelter system, as the lingering problems of one administration are passed on to the next."

 

New York Law Journal 

Court Rules City Not Bound to Continue Rent Subsidies

June 27, 2012

By John Caher 

 

New York City has no obligation to continue rent subsidies under the Advantage program designed to help homeless families and individuals secure permanent housing now that state and federal assistance is no longer available, a deeply divided Court of Appeals held yesterday in a key contractual law case.

The four-judge majority read the city's "guarantee[d]" commitment to the Advantage housing program as nothing more than an assurance that landlords would receive their rents even if the tenant was stripped of public assistance benefits, which was not the case under a predecessor housing program.

But three dissenters accused the court of allowing the city to "renege" on an inducement and expressed concern that the ruling would muddle contract law with uncertainty.

Zheng v. The City of New York, 147, involved roughly 15,000 participants in a program which paid up to $1,000 per month in rent subsidies for up to two years.

The Advantage program combined state, federal and local funds to promote permanent housing for the homeless and replaced another, relatively unstable program that was available only to those currently receiving public assistance.

Last year, the state stopped funding the initiative, and when state monies were withdrawn Advantage was no longer eligible for federal assistance. The city closed down the program in April 2011 rather than pick up the state and federal share of expenses.

That resulted in a class action suit by the Legal Aid Society on behalf of formerly homeless families and individuals who claimed that the unexpired agreements signed by landlords, tenants and the city constituted legally enforceable contracts obligating the city to subsidize rents for a full two years. The Legal Aid Society pointed to words such as "guarantee" and phrases such as "shall pay" and "will pay" in the agreements the city executed with landlords and tenants.

Manhattan Supreme Court Justice Judith Gische dismissed the suit, finding that the city "did not manifest an intent to be contractually bound" to the Advantage program, and the Appellate Division, First Department, affirmed 4-1.

Yesterday, the Court of Appeals affirmed 4-3.

Judge Susan Phillips Read and the majority said the lower courts had properly used the "template" for deciding this type of case—Brown Bros. Electrical Contractors v. Beam Construction, 41 NY2d 397 (1977)—and made a factual determination that the city had not exhibited an intent to contract.

"The courts are not empowered to second-guess the City by conjuring up a 'contract' from bits and pieces of documents meant to explain and condition participation in what was a voluntary government program," Read said in a majority opinion joined by judges Victoria Graffeo, Robert Smith and Eugene Pigott Jr. "Indeed, doing so can only discourage governmental bodies from enacting voluntary programs to help the needy; they will fear being compelled by judges to continue such programs even if sources of funding are reduced or withdrawn."

Judge Carmen Beauchamp Ciparick, along with Chief Judge Jonathan Lippman and Judge Theodore Jones, argued that the question before the court was one of law rather than fact and would have applied contract law principles to a social services program.

"Much has been made of the fact that 'the Advantage rent subsidy program for the homeless was simply a social services program,' as though the term 'social services program' were anathema to the law of contracts; it is not," Ciparick wrote. "Nor is it a shield that, when invoked, permits the City to renege on the very promises it used to induce private parties—here, the landlords, who received no program benefits—to enter into separate agreements, causing them to forego profitable alternatives for the use of their property."

Ciparick found yesterday's holding "cause for concern."

"After today, even the clearest of contract terms on which public and private entities routinely rely to efficiently coordinate their transactions apparently will grant no assurance that the law will recognize an agreement and provide a remedy for its breach," Ciparick wrote.

The dissenters also bemoaned the "human consequences" of the decision, noting that 252 families within the class are domestic violence victims and that there are roughly 42,000 individuals in the city's shelter system, 17,000 of them children.

Steven Banks, the attorney-in-chief at Legal Aid who argued the appeal, predicted that as a result of the decision the city's shelter system will be "swamped" with homeless individuals and families who have been receiving rent subsidies under the Advantage program. Approximately 8,000 households remained in the program as of February.

"I think by winning the city is actually losing because now 8,000 formerly homeless families and individuals will lose their homes prematurely and flood the shelter system at a greater cost to the taxpayers than the cost of continuing to pay the subsidies until the Advantage agreements expire in March 2013," Banks said.

"Taxpayers are being left to hold the bag for the city's position that 'guarantee' doesn't mean what the dictionary says it means."

Assistant Corporation Counsel Eric Rundbaken argued for the city.

Corporation Counsel Michael Cardozo said in a statement that the majority properly drew a distinction between "a legally binding contract" and a "social program" and "reached the right decision under the law."

In a statement, the city's commissioner of the Department of Homeless Services, Seth Diamond, said that without state and federal support the city could not sustain the Advantage program.

"Homeless Services is actively offering prevention services to households and landlords experiencing difficulties, and the overwhelming number of households who received the Advantage subsidy remain housed in the community," Diamond said.

 

The Wall Street Journal 

Court Upholds Halting of City Rent Aid Program

June 26, 2012

By Michael Howard Saul

 

New York State’s highest court ruled Tuesday that Mayor Michael Bloomberg’s administration had the legal authority to cancel a rental-assistance program for formerly homeless people, a decision that advocates fear will increase the city’s shelter population.

The Court of Appeals said "our sympathies may lie" with the plaintiffs, who sued to force the city to continue making the rental payments, but the judges determined the city made "no contractual commitment" to continue the program, known as Advantage.

"The courts are not empowered to second-guess the city by conjuring up a ‘contract’ from bits and pieces of documents meant to explain and condition participation in what was a voluntary government program," the court wrote in its 4-3 majority opinion. "Indeed, doing so can only discourage governmental bodies from enacting voluntary programs to help the needy; they will fear being compelled by judges to continue such programs even if sources of funding are reduced or withdrawn."

Advantage was intended as a bridge between homelessness and self-sufficiency, offering two years of rent subsidies to help participants get back on their feet.

The Bloomberg administration canceled the program in the spring of 2011 when the city lost the state and federal funding it needed to keep the program afloat. The courts required the city to continue making payments through January of this year. As a result, the city was forced to pay roughly $115 million of the $160 million in taxpayer funds it expected not to use when it cancelled the program.

As The Wall Street Journal reported earlier this month, hundreds of Advantage recipients, most of them children, have returned to the homeless shelter system after the city stopped making payments in February. When the payments stopped, about 18,700 people made up the 6,482 households that were receiving rent subsidies. Since then, nearly 500 people — 300 of them children — have found their way back into shelters, officials said.

Both city officials and homeless advocates expect the number to grow significantly. The city estimates nearly 1,000 families could return to city homeless shelters by year’s end, while a study from the Coalition for the Homeless estimates 3,000 Advantage families will return this year, with 2,000 of those returning as a direct result of the payments ending.

"At the end of the day, the city is certainly going to lose by winning because we’re about to see a flood of families and individuals lose their housing prematurely and end up in the shelter system," said Steve Banks, the top attorney at the Legal Aid Society, the non-profit that sued the city. "It’s astounding the city would have gone all the way to the Court of Appeals to defend their right to leave families without the ability to pay their rent."

Banks confirmed that the court’s ruling marks the end of the legal fight. There’s no further appeal, he said, "except the court of public opinion."

Seth Diamond, commissioner of the city’s Department of Homeless Services, called the court’s decision "sound."

"In the absence of state and federal partners, who carried the majority of funding, it was unsustainable for the city to maintain the Advantage program," he said. "Homeless Services is actively offering prevention services to households and landlords experiencing difficulties and the overwhelming number of households who received the Advantage subsidy remain housed in the community."

 

The Wall Street Journal

Shelters Swell After Rental Aid Is Halted

June 14, 2012

By Michael Howard Saul

 

After funding cutbacks ended a New York City rental-assistance program earlier this year, hundreds of recipients—most of them children—have returned to the homeless shelter system, according to city statistics.

The program, called Advantage, came to a halt in February. At the time, upward of 18,700 people made up the 6,482 households that were receiving rent subsidies.

Since then, nearly 500 people, 300 of them children, have found their way back into shelters, officials said.

Both city officials and homeless advocates expect the number to grow significantly. The city estimates nearly 1,000 families could return to city homeless shelters by year's end, while a new study to be released Friday from the Coalition for the Homeless estimates 3,000 Advantage families will return this year, with 2,000 of those returning as a direct result of the payments ending.

The increase comes as the shelter system is already grappling with record numbers of homeless. As of April, there were 43,000 people, including 17,000 children, sleeping each night in city shelters.

It has been a stubborn problem for Mayor Michael Bloomberg: the ranks of people sleeping in shelters has risen nearly 40% since he took office in 2002.

Advantage was intended as a bridge between homelessness and self-sufficiency, offering two years of rent subsidies to help participants get back on their feet. Recipients had to work at least 20 hours a week and cover 30% to 40% of their rent.

The Bloomberg administration canceled Advantage in the spring of 2011 when the city lost the state and federal funding it needed to keep the program afloat. Advocates sued to force the city to make the payments on its own, but in February an appeals court permitted the city to stop sending the checks. The case is still pending on appeal.

"We did the things we were supposed to do, and I feel like the proverbial rug has been ripped out from under us, and now we're back in shelter," said Patrece Murray, 33, a former Advantage recipient who has three children with medical issues. "I'm angry with the city."

Ms. Murray's children haven't been to school since they moved into a shelter on June 5. "It's been a traumatic experience," she said. "It's one hell of a mess."

Seth Diamond, commissioner of the city's Department of Homeless Services, described the number of Advantage families that have returned to the shelter system so far as "relatively modest." He said the city is "very aggressively" working to prevent evictions.

Mr. Diamond criticized advocates for the homeless, blaming them for the program's demise. Mr. Diamond said advocates lobbied against the program in Albany as the city was asking lawmakers to maintain the funding.

"The responsibility for why the program ended sooner than we would have liked does not lie with the city of New York," Mr. Diamond said. "The advocates have failed the ones who…lost the subsidy, and I think that was very unfortunate."

Patrick Markee, a senior policy analyst for the coalition, acknowledged that he and other advocates believe the program was flawed, but "the idea that we wanted the Advantage program to end and be replaced by nothing at all is absurd."

"The city had made a promise to these families that it would pay two years of rental assistance to them," Mr. Markee said. "To break that promise and pull the rug out from under them was unconscionable."

In an attempt to address part of the problem, the city has begun a targeted eviction-prevention program in Bronx Housing Court, screening Advantage members to determine whether they're eligible for a different subsidy and a pro bono attorney.

Since April, 600 families have been screened. Within 10 weeks, the city said, 30 of those cases have been favorably resolved. This summer, the pilot program will be expanded to Brooklyn and Queens.

Advocates said they believe 30 successful cases out of 600 demonstrates a problem, but city officials said they believe many of the other cases will be resolved favorably.

Steve Banks, attorney in chief at the Legal Aid Society, which sued the city over the cancellation of the program, called the end of the subsidy a "ticking time-bomb" that will cost taxpayers more than the subsidies.

On Thursday, the Independent Budget Office released a report analyzing a proposal by City Council Speaker Christine Quinn that would give homeless shelter residents priority on referrals to federal housing programs. The report pointed to some savings to the Department of Homeless Services, but there could be taxpayer costs elsewhere.

Mr. Diamond said he hasn't received a formal policy proposal from Ms. Quinn. But he said the recommendations cited in the IBO report are untenable. "We have no intention of changing our policy," he said.

Meanwhile, tenants such as Katrice Bryson, a 31-year-old single mother with a part-time job, face eviction. Ms.  Bryson said she will be tossed out of her apartment if she doesn't find $2,100 by the end of the month.

"It's scary  I don't have that kind of money," Ms. Bryson said.  "I'm trying to do everything in my power not to go back to the shelter.  I'm hoping and praying to god, but the way things are looking, I don't know.  I'm in limbo right now." 

 

The New York Daily News

New York City Shelter Population Hit Record in April, Advocacy Group Says

June 8, 2012

By Tina Moore

 

The number of people living in city shelters in April marked a record monthly high, an advocacy group’s analysis of new figures from the Bloomberg administration reveals.

The Coalition for the Homeless reports that more than 43,000 homeless individuals – including 17,000 children, another all-time monthly high – stayed in shelters each night in April.

"These new record numbers of homeless New Yorkers are a direct result of Mayor Bloomberg’s complete lack of housing options for families trapped in emergency shelter," said Mary Brosnahan, the Coalition’s executive director.

For its State of the Homeless 2012 report, the Coalition added up the number of people staying in Department of Homeless Services shelters, and emergency shelters run by the Department of Housing Preservation and Development. The city disputed the numbers; it does not count the ranks in emergency shelters as part of the overall total.

The Coalition’s analysis also showed that families stayed in shelter longer — the average shelter stay rose 28% from last year. To explain the increases, advocates point to city’s cancellation in March 2011 of the "Advantage" apartment rental subsidy. Since then, the city has lacked a program to help shelter residents attain permanent housing.

Grace Leon, 37, who has four children between the ages 5 and 15, has lived in a Brooklyn shelter since October 2010. She previously had an apartment through the Advantage program, but says she was evicted when the subsidy dried up.

"It’s hard on me as a parent," she said. "I just keep my head up and hope that tomorrow will be better."

DHS spokeswoman Barbara Brancaccio called it "outrageous" that the Coalition criticizes the stats after it "aggressively advocated to end the city’s successful Advantage rental subsidy program." The group had previously found fault with the condition of many of the buildings that accepted the subsidy.

The report recommends that the administration consider proposals backed by City Council Speaker Christine Quinn. She wants to move shelter residents into public housing or use federally funded Section 8 vouchers, as past administrations have done. She also proposes creating a new rental assistance program.

"The record homeless rates in New York City cannot continue to go unchecked," the 2013 mayoral hopeful said.

Brancaccio was critical of that approach, calling it "irresponsible and unrealistic" because the Section 8 and public housing is "unavailable."

Steven Banks, chief attorney at the Legal Aid Society, said it has been common for a mayoral administration to hand down its homeless problem to its successor.

"Over the past three decades, the last year or so of transition between administrations has led to substantial issues in the shelter system, as the lingering problems of one administration are passed on to the next," he said.

 

New York Law Journal

Judges Consider Whether NYC Is Under 'Contract' to Keep Rent Subsidies 

May 30, 2012

By Joel Stashenko 

 

Whether New York City has an obligation to continue rental subsidies it now provides for thousands of once-homeless people is being debated this week at the state Court of Appeals.

The court is also considering in a 16-case calendar that began yesterday and ends May 31 whether oral rulings on pretrial motions are appealable and will hear a judge's challenge to a determination by the Commission on Judicial Conduct that he be removed from office.

The arguments will be the last on the court's calendar except for election-year ballot challenges until after Labor Day.

The housing case, Zheng v. City of New York, 147, was prompted by New York City's announcement in 2011 that it would stop providing subsidies under its four-year-old Advantage program.

Under the program, some 16,000 formerly homeless families and individuals, many of them domestic violence victims, received up to $1,000 in monthly rent subsidies for as many as 24 months. That has shrunk to 8,000 as families completed their two-year benefits.

The aim of the program was to allow the city to clear some residents from its homeless shelters and to help them find permanent housing. The city explained when rescinding the benefit that it could no longer afford the program after the state and federal governments had withdrawn funding.

In a class-action, the Legal Aid Society argues that unexpired agreements signed between the city, participating tenants and landlords amounted to legally enforceable contracts that obligate the city to continue the rent subsidies. The agreements say the city "shall pay" and "will pay" the money for at least one year, and for a second year if a tenant's income eligibility allows, advocates contend.

Two lower courts disagreed, saying the city was not required to continue the program.

An Appellate Division, First Department, panel held 4-1 that the "trappings" of the language of contracts did not bind the city to keep it going.

"Ultimately...all of the surrounding circumstances lead to the ineluctable conclusion that the Advantage program was a social service program no different than any other, and not a contractual obligation undertaken by government," the majority of the First Department found.

In dissent, Justice Karla Moskowitz wrote that New York City "clearly agreed to pay plaintiffs' rent in return for plaintiffs' leaving the shelter system" when it signed  tenants up for the program.

The attorney-in-chief of the city's Legal Aid Society, Steven Banks, will argue tomorrow on behalf of the tenants. Assistant Corporation Counsel Eric Rundbaken will represent the city's position.